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Dissecting this morning's bad /ES trade
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Dissecting this morning's bad /ES trade

  #1 (permalink)
Elite Member
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Trading Experience: Beginner
Favorite Futures: (May 21, 2019): /MESM9 - current expectancy = (10.7193 * 0.6951) - (9.2400 * 0.3049) = 4.6337 ticks
 
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Dissecting this morning's bad /ES trade

Greetings,

I would like to learn and improve my ability to analyze and dissect my bad trades. I am hoping to learn how to create better set-ups for my trades moving forward.

This morning I felt really good about the /ESH9 with all the hopeful news of trade talks between U.S. and China, plus the market seemed to be recovering from a downward trend overnight.

The market began to look bullish this morning, and as you can see from the screenshot, there was a big buy-in at ~7:15am CST, which got reversed very quickly. I saw the following dip and thought 2716.50 looked like a strong spot to go long, expecting the bullish trend to continue. I was patient and clear-headed. The price struggled a bit to get down that low, but once it hit I thought it had a good chance to bump up to around 2718.75 and beyond.

I went long 1 contract at 2716.50 at ~7:15am CST and it felt like a good trade, but as you can see from the screenshot (edit: this is only my 2nd post so I can't link images until my 5th), it has entered a new trading-range and my timing was poor, doesn't matter if it rallies big today now, I'm out. Stopped out for an 8-tick loss at ~7:45am CST.

My questions are:

0) Did this seem like a reasonable trading opportunity?
1) I am getting squeezed a lot these days between tight stop-losses and volatile price-oscillations, one thought I've had is cutting my allowed number of losing trades in half and doubling my stop-loss width on the trades I make...that actually may have helped here, time will tell.
2) What types of set-up strategy could I have used to time this better? Did I just see something in random market noise that wasn't really there? I am not using many technical indicators or stuff like DOM (I don't think my platform even has DOM tools, I've looked). I've tried setting up Bollinger-Bands with Fast Stochastic Oscillator and things like that but it just seemed to add noise without benefit. I don't think they would have helped here but I am a beginner so I am probably wrong on many layers.

Any help is appreciated, apologies for any typos and inability to post links, etc.

Cheers,
snax

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EDIT: having image-sharing issues since this is only my second post, but you need 5 posts to share images.


Last edited by snax; February 11th, 2019 at 09:50 AM.
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  #3 (permalink)
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snax View Post

My questions are:

0) Did this seem like a reasonable trading opportunity?

You have to find your edge first, and know exactly what it is.

Without that, you will just endlessly end up second-guessing yourself.

If you are not clear about what your edge is, you don't have one.

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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  #4 (permalink)
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Trading Experience: Beginner
Favorite Futures: (May 21, 2019): /MESM9 - current expectancy = (10.7193 * 0.6951) - (9.2400 * 0.3049) = 4.6337 ticks
 
Posts: 302 since Feb 2019
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Thank you for your thoughtful reply, Anagami.

I would like to be able to measure my 'edge' probabilistically/mathematically, do you feel you have a rigorous definition of your edge that consistently proves to be (mostly) true? This is an avenue I wish to explore next.

Thank you,
snax

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  #5 (permalink)
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snax View Post
Thank you for your thoughtful reply, Anagami.

I would like to be able to measure my 'edge' probabilistically/mathematically, do you feel you have a rigorous definition of your edge that consistently proves to be (mostly) true? This is an avenue I wish to explore next.

Thank you,
snax

You are welcome, my friend.

There are two components:
1. What identifies an edge being present
2. The mathematical expectation of trading that edge

The more specific #1 is, the more meaningful #2 becomes.

#1 needs to be objective, but need not be algorithmic... in fact, I think it better not be! (...as algo trading, particularly short term, is super saturated).

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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  #6 (permalink)
Elite Member
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Trading Experience: Beginner
Favorite Futures: (May 21, 2019): /MESM9 - current expectancy = (10.7193 * 0.6951) - (9.2400 * 0.3049) = 4.6337 ticks
 
Posts: 302 since Feb 2019
Thanks: 547 given, 469 received

Ahh thank you again. This search for an edge seems to be the next huge obstacle for me, I saw this but didn't want to admit that I would be looking for something so elusive. I hope I find my way.

Cheers!
snax

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  #7 (permalink)
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Favorite Futures: (May 21, 2019): /MESM9 - current expectancy = (10.7193 * 0.6951) - (9.2400 * 0.3049) = 4.6337 ticks
 
Posts: 302 since Feb 2019
Thanks: 547 given, 469 received

in hind-sight some factors contributing to this poor trade were:

1 - thinking i'd seen a favorable set-up based on price-movement that had worked for me in the past but did not exhibit the same behavior as in previous trades. I wanted to believe my intuition was correct.
2 - looking at the pattern and thinking 8-ticks was too far for it to drop in the current conditions.

This type of thinking won't scale because things are always going to look favorable, I need to find the other factors.

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  #8 (permalink)
the coin hunter
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snax View Post
in hind-sight some factors contributing to this poor trade were:

1 - thinking i'd seen a favorable set-up based on price-movement that had worked for me in the past but did not exhibit the same behavior as in previous trades. I wanted to believe my intuition was correct.
2 - looking at the pattern and thinking 8-ticks was too far for it to drop in the current conditions.

This type of thinking won't scale because things are always going to look favorable, I need to find the other factors.

you make 5 posts try to post image again.

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  #9 (permalink)
Elite Member
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Trading Experience: Beginner
Favorite Futures: (May 21, 2019): /MESM9 - current expectancy = (10.7193 * 0.6951) - (9.2400 * 0.3049) = 4.6337 ticks
 
Posts: 302 since Feb 2019
Thanks: 547 given, 469 received

Thank you for the reminder, Cory

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  #10 (permalink)
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snax View Post
Thank you for the reminder, Cory

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

A question for you: Had the the trade worked out, would you have considered it a 'good' trade? In other words, are you evaluating individual trades in terms of their outcomes?

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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